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Articles Posted in Non-Traded REITs

NorthStar Healthcare Investors Should Explore Legal Options to Recover Losses

Eighteen months after NorthStar Healthcare REIT suspended distributions, investors are still grappling with the losses they’ve sustained. Now, the non-traded real estate investment trust’s (non-traded REITs) share price appears to have lost most, if not all, of its value.

If you are a Northstar Healthcare investors, our non-traded REIT fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) would like to help you explore your legal options. You very well may have grounds for a broker negligence claim to recover your losses and damages. 

Non-Traded Real Estate Investment Trusts Are Risky, Illiquid 

If you are a retail investor in San Francisco whose broker is recommending that you invest in non-traded real estate investment trusts (non-traded REITs), you should strongly reconsider. 

While often touted as a security that allows investors to make money without having to worry about market volatility – this type of investment is actually still high risk, illiquid, and not suitable for many customers including retail investors, retirees, and other conservative investors with low-risk tolerance levels.

Preferred Apartment Communities Investors Pay High Commissions

Throughout the United States, our non-traded real estate investment trust (REIT) attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are speaking to investors whose registered brokers or investment advisors persuaded them to invest in Preferred Apartment Communities, which is a non-traded REIT. 

This investment has paid stockbrokers up to 7% commission and comes with additional fees, including around 4-5% in brokerage firm fees and offering costs. 

NEXT Financial Group Sold Unsuitable REITs To Investors, Including Older Seniors 

If you were an investor who suffered losses in Real Estate Investment Trusts (REITs) that were recommended and sold to you by a NEXT Financial Group broker, Shepherd Smith Edwards and Kantas (SSEK Law Firm) wants to talk to you. 

The Houston-based independent brokerage firm was recently fined $150K by the Massachusetts Securities Division for selling REITs to investors even when these investments were not suitable for them. 

Centaurus Financial Broker Named In Multiple Customer Disputes 

If you suffered substantial investment losses while Centaurus Financial broker, Katherine Nishnic, was your registered representative, please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm). We can help you determine whether you have grounds for a broker fraud case. According to her BrokerCheck record, Nishnic is already the subject of at least eight customer disputes

She has been in the industry for 25 years and a Centaurus broker for four years. Previous to that, Nishnic was registered as a broker for JP Turner and before that with GunnAllen Financial, First Allied Securities, DE Frey & Co., Merrill Lynch and Pierce Fenner and Smith.  

If you are an investor who suffered financial losses while working with former Voya Financial Advisors (VOYA) broker James T. Flynn, please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. 

Our broker fraud lawyers are investigating claims brought by the former clients of Mr. Flynn while he was a registered broker with Voya Financial from 2013 to 2017 and previous to that while he worked with other financial firms. Voya fired him in 2017. 

With 18 years of experience in the industry, Flynn, who was barred by the Financial Industry Regulatory Authority (FINRA) in 2018 after he failed to respond to the self-regulatory organization (SRO)’s request for more information in a probe involving him, has forty disclosures on his BrokerCheck record

Did you invest with Darren Oglesby (Monroe, LA) and/or Money Concepts Capital Corp. and suffer losses in GPB Capital or other private placement transactions?  If so, we may be able to help you recover your losses.

Shepherd, Smith, Edwards & Kantas, a national law firm dedicated to representing wronged investors, is investigating claims on behalf of current and former clients of Darren Oglesby and/or Money Concepts Capital Corp.  who were sold GPB Capital and other private placements, such as non-traded real estate investment trusts (“REITs”).  Private placements, such as GPB Capital, are often marketed to investors as safe ways to obtain a higher return.  In truth, these investments are high-risk securities and typically illiquid and impossible to accurately price.

GPB Capital is a good example of what can go wrong with such private placements and why they are supposed to only be sold to very sophisticated investors willing to take high risks.  For GPB Capital, the company raised a reported $1.8 billion from investors nationwide.  Nevertheless, it has been more than a year since the company failed to make required SEC reports.  Since then, financial information has been consistently delayed, the company’s auditor quit, several regulators have opened investigations into GPB Capital, the FBI raided the company’s offices in New York, a former business partner accused the company of being a “Ponzi scheme” and a current business partner has publicly reported accounting irregularities.

An alternative investment fraud settlement has been reached between Purshe Kaplan Sterling Investments and the Saginaw Chippewa Indian Tribe of Michigan, in which the independent broker-dealer will pay $9.5M. The tribe had filed an arbitration claim contending that it didn’t know that it was paying the firm millions of dollars in commissions on $190M of alternative investments that were purchased through former Purshe Kaplan broker Gopi Krishna Vungarala between 2011 and 2015, including shares in business development companies and non-traded real estate investments trusts (REITs).

Vungarala was not only the Michigan tribe’s broker but also he served as its investment manager, tasked with overseeing its portfolio. He has been accused by the Financial Industry Regulatory Authority (FINRA), too, of to the tribe about the commissions.

The self-regulatory authority (SRO) recently sought to bar the Purshe Kaplan broker from the industry after the alleged fraud occurred—a motion that is on appeal. FINRA also ordered him to disgorge nearly $9.7M plus interest. The SRO said that Vungarala neglected to tell the tribe that it qualified to receive over $3.3M in volume discounts, which would have lowered how much he made in commissions from the sales.

Trouble is brewing with a number of nontraded real estate investment trusts (REITs) and now, investors are filing claims for their losses. One of the REITs, NorthStar Healthcare Income, Inc., suspended distributions to investors on February 1.

Closed to new subscriptions since December 2015, the publicly registered REIT was set up to acquire, originate, and oversee securities in the healthcare industry. Northstar told investors that challenges involving performance and operations had resulted in a reduced estimated value/share in 2018 compared to 2017—from an $8.50 NAV/share at the end of June 2017 to $7.10 NAV/share in December 2018.

The nontraded REIT’s board cited a number of reasons for the decrease: a cash flow affected by the senior housing market, labor costs related to the investments that have impacted the REIT’s portfolio, more cash flow issues—this one impacting the skilled nursing industry—and assets’ income losses.

If you are an investor in NorthStar Healthcare Income, you very likely received a letter last month notifying you that monthly distributions from this investment have been suspended. According to NorthStar’s board, the publicly registered nontraded real estate investment trust’s (nontraded REIT) portfolio has been undergoing “operational and performance challenges” that as of the end of June 2017 has resulted in a “lower estimated value/share” of the NorthStar Healthcare’s common stock. The nontraded REIT has since determined that in order to protect both capital and its financial state, suspension of these distribution payments is necessary.

The NorthStar Healthcare Inc. nontraded REIT was set up to originate, acquire, and oversee healthcare industry-related investments, including debt, equity, and securities investments involving healthcare real estate. Sources note that between 2013 and 2018, it raised about $2B and set up a portfolio involving more than 650 properties.

However, NorthStar Healthcare Income began reducing distribution rates in December 2017. By October of last year, it had notified investors that it would only buy back shares from an investor if qualifying disability or death were factors. In December 2018, the nontraded REIT reduced its net asset value from $8.50/share to $7.10/share. Now, with the distribution suspension, some investors are standing to lose not just their monthly distributions, but also they could see a substantial decline in value on their principal that they originally invested.

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